Health Information Management

Outpatient coding denials on the rise, according to AHA survey

APCs Insider, December 19, 2014

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By Steven Andrews
 
Complex denials by Recovery Auditors (RAs) for outpatient coding have risen sharply over the last year, according to the latest survey by the American Hospital Association (AHA).
 
In the third quarter 2014 AHA survey, more than 1,000 hospitals were asked to rank complex denials by reason, and the results showed 28% of hospitals reporting denials for outpatient coding errors. That number is up from 10% in the first quarter of 2014 and 7% in the fourth quarter of 2013.
 
Part of the reason could be RAs are focusing more on outpatient coding claims due to the CMS prohibition on allowing RAs to conduct inpatient hospital status reviews on claims from October 1, 2013, to March 31, 2015. In the latest survey, only 23% of hospitals reported short-stay medically unnecessary denials, down from 59% in the first quarter 2014. Inpatient coding denials were also down to 25% from 59% over the same time period.
 
The rise in complex denials related to outpatient coding could have a major impact on a hospital's bottom line. Among respondents to the latest survey, the nationwide average dollar amount of automated denials was $688, while complex denials averaged $5,615.
 
However, the survey also found that hospitals successfully appealed RA recoupments 70% of the time. Respondents reported appealing nearly half (48%) of automated and complex denials.
 
Respondents were still waiting for the results of 59% of appealed claims, with more than 130,000 appeals out of 223,000 awaiting determinations. That number climbs as the appeals reach higher stages, with 62% of claims at the Administrative Law Judge stage nationwide past the 90-day statutory deadline. Respondents from Region D, comprised of Western and Midwestern states, reported 85% of appeals at that level were past the deadline for a ruling.
 
In addition to the time it takes for hospitals to recover money via appeals, hospitals face the administrative burdens related to the process. They must coordinate across departments to collect information, find the necessary documentation to submit, and write appeals. According to the survey, 58% of hospitals spent more than $10,000 on managing the RA appeals process during the third quarter, with 39% spending more than $25,000, and 9% spending more than $100,000.
 
Note: APCs Insider will not publish the weeks of December 26 and January 2 due to the holidays, so look for the next edition on Friday, January 9. Thank you for being a loyal reader of APCs Insider and have a safe and happy holiday season!



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